FILING REQUIREMENT REVISED PER INTERIM FINAL RULE

FinCEN  has issued an interim final rule clarifying its position with respect to enforcement of the CTA.  U.S. domestic reporting companies and U.S. domestic persons are not required to file, though international reporting companies are so required and new deadlines have been set for them.  The interim final rule follows U.S. Treasury’s March 2, 2025 announcement.

How did we get here?

The Corporate Transparency Act (“CTA”) took effect on January 1, 2024, requiring certain small- and medium-sized corporations, LPs, LLCs, and similar closely held entities “reporting companies” to report certain company information and beneficial ownership information reports (BOIRs) to the US Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).

On December 3, 2024, a federal district court in Texas issued a preliminary injunction to prevent enforcement of the CTA nation-wide. The U.S. Court of Appeals for the Fifth Circuit stayed the District Court’s order on December 23, reinstating the filing requirement.  FinCEN initially responded that reporting companies formed prior to January 1, 2024 would have until January 13, 2025 to file their initial BOIRs, but a different panel of the Fifth Circuit reinstated the injunction.  On January 23, 2025, the US Supreme Court granted the government’s motion to stay the injunction (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland).

In Smith v. U.S. Department of the Treasury, a different federal judge (also in Texas) on January 7, 2025 issued an order enjoining the government from enforcing the CTA against the plaintiffs in that case.  Notwithstanding the grant of stay in Texas Top Cop Shop and the limited application of the order in Smith, on January 24, FinCEN posted on its website an update indicating that there would be no filing obligation for reporting companies while the Smith order remained in effect.  On February 5, the Department of Justice filed a notice of appeal of the order in Smith and sought a stay of that order.  That stay was granted on February 18, 2025.  FinCEN responded, because the stay in Smith was granted, by reimposing the filing requirement for all reporting companies, with a new deadline of March 21, 2025 for initial filings.  https://fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf

In the meantime, on February 10, 2025 the House of Representatives unanimously approved legislation (HR736) that would extend the reporting obligation to January 1, 2026 for those reporting companies formed prior to January 1, 2024.  This bill was sent on February 11 to the Senate, read twice, and referred to the Senate’s Committee on Banking, Housing, and Urban Affairs.

The CTA requires reporting companies to file a report listing:

• Reporting company’s legal name, trade name, DBA, address for principal place of business, and tax identification number.
• Each beneficial owner’s legal name, address, date of birth, and unique identification number from an “acceptable identification document” such as a driver’s license or passport (and a copy of that driver’s license or passport).

Under the interim final rule, only “foreign reporting companies” are required to file (with an extended deadline of 30 days from the March 26, 2025 publication of the rule); U.S. domestic reporting companies are exempted and not required to file.  Of course, reporting companies may file voluntarily.  To do that:

• Analyze Your Entity: In consultation with your business attorney and CPA, determine whether the entity is a “reporting company” required to file reports with FinCEN.  This requires an analysis of the entity’s structure, among certain other factors.  Document the reasons for the determination.
• Create Procedures for Gathering Information and Filing Reports: If you have determined that the entity is a reporting company, then work with your business attorney and CPA to identify what information must be collected and calendar when reports must be filed.  To the extent necessary, contact an estate and trust attorney to identify what information the reporting company may need to collect about trustees and beneficiaries of trusts that own interests in the reporting company.  Reporting companies should educate their officers, directors, managers, and beneficial owners on the importance of providing timely information to the reporting company in response to information requests so that the reporting company can file accurate and timely reports with FinCEN.  In addition, reporting companies need to develop a process of gathering, storing, processing, and real-time monitoring any changes or corrections that must be reported.
• Make It Easier: If the entity is a reporting company, encourage its beneficial owners to obtain FinCEN Identifiers; this enables the beneficial owners to provide and update their personal information directly with FinCEN, improving privacy for the beneficial owner vis-à-vis your reporting company and simultaneously reducing the administrative burden for your reporting company to relay updates from beneficial owners to FinCEN.  To get a FinCEN Identifier, go here:  https://fincenid.fincen.gov/landing .
• Consider Amending Governing Documents: To ensure that the entity can meet its reporting obligations, governing documents (e.g., shareholders agreement or operating agreement), and even employment policies and agreements, can be amended to require all owners and certain employees timely to disclose required information or face a consequence.
• File Your Beneficial Ownership Information: Reporting companies may file online at https://boiefiling.fincen.gov/ .

Compliance with the CTA is the responsibility of the reporting company but necessitates the cooperation of all beneficial owners, decision-makers, and others having influence with the reporting company.  FinCEN has some materials, including FAQs, on its website at https://www.fincen.gov/boi-faqs and offers a Small Entity Compliance Guide (links to which are among the FAQs on the FinCEN website).

Pasternak & Fidis is not undertaking the preparation and filing of reports.